Phoenix’s net profit plunged 80% due to declines in capital markets by Investing.com

© Inbal Marmari, Phoenix Holdings PR

| Polly Tal, Investing.com |

The Phoenix Group (TASE:) on Wednesday published financial reports for the first nine months of 2022 showing an increase in total premiums and benefits but also a sharp decrease in total profit as a result of the sharp declines in the financial markets which were slightly offset by the increase in interest rates.

The Phoenix stock is down 0.8% on the Tel Aviv Stock Exchange after the publication of the reports, when in the last 12 months it rose 9.3% and the company’s market value rose to approximately NIS 9.8 billion.

Phoenix’s results in the first nine months and the third quarter of 2022 were, as mentioned, affected by the declines in the capital markets. The total negative effect, before tax, of these decreases on Phoenix’s results minus the effect of the interest rate increase amounted to NIS 721 million in the nine months and NIS 269 million in the third quarter.

The effect of the increase in interest amounted to a positive sum of NIS 1.389 billion. The negative return on Nostro investments was (4.24%) from this return a real return of 3% and an amount of variable management fees calculated on the basis of the aforementioned real return rate in the amount of NIS 2,110 million were transferred (deducted).

The total profit for the shareholders in the first nine months and the third quarter of 2022 amounted to a total of NIS 599 million and NIS 62 million respectively, reflecting a return on equity for the shareholders of 8.4% and 2.6% respectively. This is compared to a total of NIS 1.557 billion and NIS 404 million in the corresponding periods in 2021

Total premiums and benefits grew in the first nine months of 2022 at a rate of 22% compared to the same period last year and amounted to NIS 25.1 billion.

The solvency ratio as of June 30, 2022 including transition provisions is 202% compared to 190% at the end of 2021.

In the core non-insurance activities (asset management, agencies, and credit sectors) a net profit of NIS 281 million (without one-time profits) was recorded, reflecting a growth rate, in accordance with the group’s strategy, of approximately 14% compared to the corresponding period last year

The company’s equity at the end of the quarter stood at NIS 9.6 billion, after the distribution of a dividend of NIS 160 million (for the first median profits of 2022) and making an own purchase in the amount of NIS 56 million

The amount of assets managed by the group increased during the quarter and amounts to NIS 364 billion. The growth stems from the positive gap between growth in deposits and the declines in the capital markets.

After the reporting period, the group signed an agreement to purchase Epsilon Investment House, which manages assets totaling approximately NIS 11 billion in active and long-term mutual funds.

The credit rating of Phoenix Holdings AA- and Phoenix Insurance AA+. The group has financial flexibility and a high liquidity profile.

Eyal Ben Simon, CEO of the Phoenix Group (pictured above):

“The Phoenix Group consistently implements the profitable growth strategy, and in accordance with the goals we have set for the group for the medium term in the fields of insurance, investment and asset management, distribution and credit. The group’s profits reflect growth in activities that generate a high return on capital and an improvement in operational performance, even in the face of a volatile capital market. The constant improvement in the capital adequacy ratio (solvency) improves the group’s ability to continue the momentum of financial and strategic investments in attractive assets with high business potential.”

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